Be Careful If Your Online Advertising Relies on Terms You Do Not Own

“Rosetta Stone’s complaint, filed in 2009, alleged that Google infringed Rosetta Stone’s trademark rights by selling its trademarks as keywords to third-party competitors without [its] permission…” – Fourth Circuit Resurrects Rosetta Stone’s Challenge to Google’s AdWords Program, by Mintz Levin

If your online strategy involves use of your competitor’s trademark(s) to drive Google traffic, it might be time for a change. Two ongoing lawsuits send a warning call to companies that advertise on the web.

The first has to do with Google Adwords; the second: with the use of “meta tags” on business websites. Both cases raise the thorny issue of copyright infringement that comes from using a competitor’s trademarked terms to raise awareness for your own business.

Earlier this month, the Court of Appeals for the Fourth Circuit found that Rosetta Stone should be allowed to present its trademark infringement case against Google for selling the company’s trademarks as keywords on Google AdWords.

It’s the first time a court of appeals has determined that a company can bring a trademark infringement case against Google claiming that sponsored links are confusing to consumers. If Rosetta Stone is successful, it could mean that many more companies will sue Google on similar grounds (including, but not limited to, the 33 companies that filed briefs in support of Rosetta Stone).

What does the ruling mean for companies that buy keywords in Google’s AdWords? The short answer, from law firm Lane Powell:

“[K]eyword purchasers and online advertisers should be wary of using others’ trademarks in a manner that creates a known likelihood of confusion.” (Fourth Circuit Revives Question Regarding Use of Trademarks as Keywords and in Google Ads)

Longer term, it’s important to remember that Google – and not its advertisers – is on trial. But a victory for Rosetta Stone could well force Google to change certain AdWords practices, leaving some advertisers out in the cold:

• Selling trademarks to non-trademark holders:

“The appeals court found that there was sufficient evidence to suggest that a reasonable trier of fact could find that Google intended to cause confusion since it had knowledge that confusion was likely to result from its use of trademarks.” (Fourth Circuit Revives Rosetta Stone’s Claims Against Google Over its AdWords Program by Venable LLP)

• Convincing companies to advertise using trademarks they do not own:

“In alarming news for Google, the court of appeals reversed the trial court’s dismissal of the contributory infringement claim. Under contributory infringement, a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorily responsible for any harm done as a result of the deceit.” (Are Google AdWord Trademark Claims Back? Rosetta Stone Case May Open the Door by Looper Reed & McGraw, P.C.)

• Claiming trademarks for use as keywords:

“Additionally, the district court erred in its conclusion that trademark keywords are per se ‘functional’ when entered into Google’s AdWords program… The Fourth Circuit, noting that the functionality doctrine ‘simply does not apply in these circumstances,’ explained that this analysis incorrectly focused on whether “Rosetta Stone’s mark made Google’s product more useful, neglecting to consider whether the mark was functional as Rosetta Stone used it.” Since the answer to the latter question was clearly ‘no,’ it was ‘irrelevant whether Google’s computer program functions better by use of Rosetta Stone’s nonfunctional mark.’” (Google AdWords Appellate Decision Injects Some Uncertainty Back Into the Keyword Game by Foley Hoag LLP)

• Selling trademarks to companies accused of being counterfeiters:

“Despite evidence that Google allowed known infringers and counterfeiters to bid on Rosetta Stone’s trademarks as keywords, the district court granted summary judgment in Google’s favor, finding that Rosetta Stone had not met its burden of proving that summary judgment was proper as to its own contributory infringement claim. The court of appeals noted, however, that … the issue was whether Google had met its burden for its summary judgment motion, which the court of appeals found it had not.” (The Fourth Circuit Says, “Not So Fast,” to Google and Revives Rosetta Stone’s Direct and Contributory Trademark Infringement and Dilution Claims in Closely Watched AdWords Case by Orrick, Herrington & Sutcliffe LLP)

• Using trademarks to advertise its own services:

“The district court had granted Google’s summary judgment motion on Rosetta Stone’s dilution claim because (1) Rosetta Stone failed to present evidence that Google was “us[ing] the Rosetta Stone Marks to identify its own goods and services” and (2) Rosetta Stone failed to demonstrate that Google’s use of the mark was likely to impair the distinctiveness of or harm the reputation of the Rosetta Stone Marks. The Fourth Circuit disagreed with both conclusions.” (Fourth Circuit Resurrects Rosetta Stone’s Challenge to Google’s AdWords Program by Mintz Levin)

The second lawsuit involves companies that are less well known, but the issues at stake are no less relevant.

In late March, a Federal district court in Oregon ruled to continue an infringement case involving a company that put a competitor’s trademark into its website meta tags. The defendant, a company based in Connecticut, claimed that it shouldn’t be tried in Oregon. Not so fast, said the court:

“The court denied the motion, finding that by inserting plaintiff’s trademark as meta tags into the [Connecticut] company’s website design, [the defendant] ‘purposefully directed her activities to Oregon.’” (Use of Competitor’s Trademarks as Meta Tags is Basis for Personal Jurisdiction by Miller Canfield)

Translated: companies that place trademarked names into their website meta tags won’t be getting off easy.

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While each case has its own particular focus, both shed light on what is bound to be an issue we’ll see again and again, as companies enact all manner of online advertising and marketing tactics to rise above the noise.

The takeaway for now: know who owns the keywords you’re gaming for as you secure your corporate footprint online.

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